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If you are one of the many people who have had to file bankruptcy, don’t fret. All is not lost. Yes it is devastating as well as life-changing for an individual but there are some things that you can do to get your credit score back in tip top shape. There is hope.

1. The first step to take is to get a secured credit card. Apply for these cards on-line with lenders that have extensive training in servicing post-bankruptcy secured credit cards. Do a Google search using terms like secured credit cards, high risk credit cards and possibly hard money lenders. The use of these kinds of lenders is helpful because they will be useful in assuring that you will get the best rate possible. This is essential because filing bankruptcy will automatically ensure that you will be charged higher rates than normal.

2. Get more than one secured credit card, being careful to keep the balances on both cards minimal or manageable for your budget. For example, if your credit limit is $2000.00, keep your balance at $500.00 or below. Your debt to limit ratio is 25% and is less than the recommended 35% or less that lenders like to see.

3. Next step is to make large payments on the credit card balances. Do not only pay the minimal amount required. Try to always pay more than requested, but do not pay the credit card balance in full. Make punctual payments for at least 6 months to a year, after which time if you are able, you can pay the balance in full. This will establish a solid payment history, doing wonders for your credit score.

The decision to file for either a business or personal bankruptcy is difficult enough. While you may have prepared yourself for the short-term and long-term financial consequences for the decision, most likely the emotional consequences have yet to be addressed. Each person is different and for some the emotional reactions are less than others but for the most part, each walks through the different stages although not necessarily in any particular order. By being aware of the emotional stages to the bankruptcy and learning to cope effectively you can begin to heal from the storm of bankruptcy.

Shock – Is this really happening? This is the most immediate reaction to the reality of filing for bankruptcy and usually lasts for a couple of weeks. It is similar to a deer caught in the headlights of an oncoming car; you feel paralyzed, overwhelmed, and insecure about the decision you made. Worse, some your past decisions are what contributed to this moment so you are reluctant to trust even yourself to make the simplest of decisions in the moment. Shock fades as the reality of your situation sets in and some minor decisions are able to be made.

Guilt – What have I done? Recalling past mistakes over and over for the point of learning from them is useful but when the recalling turns into beating yourself up, it becomes destructive. Feelings of guilt over poor decisions in the past seem to flood your thinking and can be too much to handle at times. Being aware of your mistakes and learning from them is different from agonizing over them. What is done is already done, now is not the time to beat yourself up over the past, rather begin to look forward to the new possibilities.

A quick bankruptcy filing can erase all of your debt, make the bill collectors stop calling, and give you a free pass to a better future. This is how many people think about chapter 7 bankruptcy, but then they learn about the Means Test. For some, this test bursts the bubble of hope and puts a price tag on that pass to a better future.

What is the Means Test?

The means test uses three factors to determine whether you are financially allowed to go through with a chapter 7 bankruptcy filing:

• The median income for households of your size in your state.
• Your total income.
• Your expenses.

In order to be considered eligible for chapter 7 bankruptcy filing you have to meet one of these criteria:

• Your total income is less than the median income for a family of your size in your state.
• Your income is higher than the state median, but you have enough expenses to justify a bankruptcy filing at this time.

The basic goal of the means test is to make sure that people who have enough disposable money to pay their bills are not able to file for chapter 7 and erase debt just to get out of paying. If you have the ability to free up some of your income and pay back your debt, then you should be forced to do so.

If you have enough free income to pay back some of your debt but not all of it, then you will likely be suggested for a chapter 13 bankruptcy filing rather than the chapter 7 filing. Chapter 7 completely erases away your debt while chapter 13 allows you to restructure the payback so it is more affordable to your current income.

Being deep in debt can feel hopeless. To make matters worse, there are lawyers who advertise on radio and television who promise to make everything better through the magic of bankruptcy. All you need to do is call their toll-free telephone number for a no-obligation consultation and you’ll be on the road to financial freedom. While there may be rare cases where it can help, here are 10 things you should know before filing for bankruptcy.

1. It is not the ultimate solution to your money problems. You may be able to get rid of your debt, but you will only be treating the symptom of your problem and not the cause. Chances are it wasn’t entirely your fault that you went into debt, but there are also things you could have done differently. Learning new spending and saving habits is a vital step to regaining control; whether you end up filing for bankruptcy or not.

2. Declaring bankruptcy is much harder than it used to be. The bankruptcy law changed on 200?. There are more hops to jump through, and it’s not an easy process. You can always try a do-it-yourself bankruptcy, but they have made it so complicated that you’re practically forced to hire a lawyer.

3. There is more than one kind of bankruptcy. When it comes to normal consumer debt, there is Chapter 7 and Chapter 13 bankruptcy. To put it in simple terms: Chapter 7 wipes the slate clean, and Chapter 13 sets up an affordable payment plan.

4. You must qualify before filing. Not everybody can file for Chapter 7. That’s because one of the steps is to pass a “means test”. The main purpose is to see if you are capable of paying off your debts under Chapter 13, or if you are “poor” enough to use Chapter 7. The catch is that the courts get to decide what you can afford; not you.